Royal Bank of Scotland chairman Sir Philip Hampton has warned that further branch closures are “inevitable” as the state-backed lender continues to tackle its financial restructuring.
Addressing shareholders at the group’s annual meeting in Edinburgh, Sir Philip also insisted that RBS will maintain its neutral stance in the run-up to the independence referendum, and said it is considering its options should voters choose to break away from the rest of the UK in September.
RBS, 81 per cent owned by the taxpayer, unveiled plans in April to close 44 sites across the UK – including 14 classed as “last banks in town” – as the rising popularity of online and mobile banking contributed to a 30 per cent fall in branch transactions since 2011. This came despite a pledge from the firm to “stay open for business if we are the last bank in town and consider a range of options to ensure a local banking service is available”.
At yesterday’s meeting, held at its Gogarburn headquarters in Edinburgh, Sir Philip told investors that the bank will retain a “very large branch network”, having spent £130 million refurbishing almost 700 branches since 2011.
“But with continued rapid change in the way people choose to bank, there will inevitably be further closures,” he said. “Where we have to make the difficult decision to close a branch, we will tell our staff and customers first and set out what the alternatives are, such as the Post Office network or mobile vans.”
Chief executive Ross McEwan added: “The truth is that some branches hardly see a customer, which is why we’re taking tough decisions about closing, and sometimes making redundancies – although that is always a last resort.”
Sir Philip said the looming independence vote had created a “great deal of uncertainty” and would have implications for the bank’s credit rating, tax and regulation.
“If there is a Yes vote, there would be a period of time between the referendum and Scotland actually becoming independent when the UK and Scottish governments would enter negotiations,” he said. “During this transition period, the Bank of England would be lender of last resort to the banking sector and the UK would be the sovereign domicile for RBS.”
Business Secretary Vince Cable has said RBS would “inevitably” move its HQ from Edinburgh to London in the event of independence because of the greater stability offered by its established financial system and regulation.
RBS’s board faced no questions from shareholders over the issue of independence, but concerns were raised over its backing for the coal industry and Sir Philip faced tough questioning over the conduct of its Global Restructuring Group (GRG) division, which had been accused of deliberately driving small firms out of business to profit from their assets.
Gavin Palmer, a former director of shareholder association ShareSoc, said: “If you have a cancer patient, you don’t treat them by cutting off their good legs and hoping that the patient recovers. Yet it seems to me that this is what RBS has been doing for the past five years.”
Sir Philip said: “GRG has dealt with many thousands of customers and it’s inevitable that some will have been treated with excess gentleness and some with excess roughness.”